Endesa, ICO and EIB Sign €500 Million in Sustainability-Linked Financing
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- ICO and European Investment Bank (EIB) loans of €300 million and €200 million respectively support the development of Endesa’s solar and wind energy projects, helping accelerate the European Union’s energy transition and supporting the REPowerEU programme to end dependence on fossil fuel imports.
- Loan conditions can be improved if (Scope 1) direct greenhouse gas emissions are reduced, in line with UN Sustainable Development Goal 13 (climate action).
Endesa, ICO and the European Investment Bank (EIB) have joined forces once again to boost the rollout of renewable energy in Spain. To this end, Endesa CEO José Bogas, ICO Chairman José Carlos García Quevedo and EIB Director of Operations in Spain and Portugal Gilles Badot, signed two financing operations for €300 million and €200 million, respectively, today in Madrid. The goal of the agreements is to finance Endesa’s investment for renewable energy in Spain.
The €300 million loan from ICO aims to support Endesa’s project started in 2021 to build 20 solar photovoltaic plants and eight wind farms, complementing the financing granted by the EIB. These solar photovoltaic plants will provide an estimated capacity of 2.35 GW, while the wind farms will provide 0.55 GW.
The €200 million EIB loan tranche completes the framework loan approved by the EU bank to support Endesa’s renewable energy expansion plan, totalling €700 million. The project will help accelerate the energy transition, improve supply security and foster climate action, thus contributing to REPowerEU – the European Union’s plan designed to strengthen Europe’s energy autonomy.
Specifically, the EIB’s framework loan to Endesa will co-finance a large number of the company’s commercial-scale solar photovoltaic and wind energy projects in Spain, and the transmission infrastructure required for interconnection to the grid. These projects involve a series of renewable assets within a portfolio of projects comprising 16 commercial-scale solar developments and eight wind energy projects. They will provide some 1.5 GWp of solar photovoltaic power and 0.4 GW of onshore wind power, which is equivalent to the annual energy consumption of around 1 million households.
At the signing ceremony at Endesa’s headquarters today, CEO José Bogas said that “having the support of the EIB and ICO once again is a guarantee of the steadfastness of Endesa’s commitment to pursuing its strategic plan and continuing on its path to total decarbonisation. This sustainability-linked loan will help us adhere to the Law on Climate Change and Energy Transition, as well as Spain’s National Integrated Energy and Climate Plan (PNIEC 2021-2030). It will also be line with the European Union’s Fit for 55 legislative package, which will make Europe the first carbon neutral continent by 2050.”
ICO Chairman José Carlos García de Quevedo added: “The signature of the operation is another step forward in ICO’s commitment to the development of sustainable finance — an objective we share with the EIB — to drive the green transition and environmental sustainability. The projects Endesa will develop using the financing signed today will move us forward on the path to decarbonisation, generating positive environmental and social impact.”
EIB Director of Operations in Spain and Portugal Gilles Badot said that “this EIB operation with Endesa will provide a boost to the rollout of renewable energy across Spain to meet EU climate goals, helping to ensure a sustainable and resilient energy supply. Many of the Endesa solar and wind energy projects we are financing are also located in cohesion regions, meaning we are promoting equitable growth and convergence between the EU regions, which is one of the key aims of the EIB’s cross-cutting policy objectives.”
See related article: EIB Issues First Ever Digital Climate Awareness Bond and Swedish Krona Transaction
These new financing operations pair financial conditions with a Scope 1 direct greenhouse gas emissions reduction target, the achievement of which will also be certified by an independent third party (AENOR). Endesa’s 2023-2025 strategic plan is to reduce these emissions to below 145 g CO2eq/KWh by December 2025 (currently at 205 g CO2eq/KWh by the end of 2022).
Endesa is a leader in financial operations with sustainable incentives and, at the end of 2022, 64% of its total lending included this type of incentive applied to working-capital operations and guarantee lines. The aim is for 87% of its lending to be sustainability-linked by the end of 2025.
Sustainable financing champions
Endesa has an ongoing relationship with both the EIB and the ICO in long-term, sustainability-linked financing operations. Both financial institutions concluded their first sustainable operations in Spain with Endesa.
ICO first specified its internal criteria for classifying an operation as “green” with the signature of its first green loan with Endesa in May 2019 (€300 million), following up with another one in December 2021. The €300 million granted by ICO at the time was its biggest sustainability-linked loan.. The loan signed today will be the third of its kind between Endesa and ICO.
The EIB — the world’s largest multilateral lender for climate action projects — concluded its first sustainable financing operation with Endesa in 2021, with two more signed since then, in several tranches, with a total amount of €1.2 billion including today’s loan.
The path to climate neutrality
These operations will help Endesa to stay the course on its roadmap to net zero. In November last year, Endesa presented its latest strategic plan for 2023-2025, under which it continues to make steady progress in its decarbonisation objectives. The total planned investment for the Iberian Peninsula in the new strategy is 15% higher than in the 2022-2024 plan (at €8.6 billion), largely due to the accelerated development of solar and wind farms (€4.3 billion, 39% more than in the previous plan).
ICO financing to boost green transition
ICO promotes the financing of renewable energy projects that boost the green transition, in accordance with the ICO Group’s 2022-2027 Strategy and the Recovery, Transformation and Resilience Plan. In the last two years, ICO has approved more than €2 billion in financing for renewable energy projects promoted by Spanish companies, such as solar plants, wind farms -both onshore and offshore-, hydrogen and biomass infrastructures, and energy efficiency and energy saving projects.
The EIB and energy security
In 2022, the EIB Group committed financing of more than €17 billion for the energy transition in Europe. Spain received a record €3.2 billion in financing for sustainable energy and natural resources projects in the same year, making it the second largest beneficiary of financing in the European Union. In October 2022, the EIB decided to raise the Group’s clean energy financing volumes to unprecedented levels in support of the REPowerEU objective of ending Europe’s dependence on Russian fossil fuel imports. An additional €30 billion will be invested through 2027 and the financing pledged under REPowerEU is expected to generate an additional €115 billion in investment by 2027, thus making a substantial contribution to the EIB Group’s target of mobilising €1 trillion in climate finance this decade.